Can you really deduct home internet? I've been working as a freelancer for 2 years and my tax guy never mentioned this! How do you calculate what percentage to deduct?

You can absolutely deduct a portion of your home internet if you use it for your freelance work! The key is determining what percentage of your internet use is for business versus personal. A reasonable approach is to estimate the percentage of time you use the internet for work purposes. If you use your home internet 60% for business and 40% for personal, you can deduct 60% of the cost. Just make sure you can justify this percentage if questioned. Keep good records showing your work patterns and be prepared to explain your calculation method. Some people also base it on the number of devices in the home and how many are used for business.

SEP IRAs are amazing for self-employed people! You can contribute up to 25% of your net self-employment income up to $66,000 (for 2023). It directly reduces your taxable income. I've been using one for years for my tutoring business alongside my teaching job.

Just checked and there's nothing in box 8, so I don't think it's allocated tips. All my tips are reported in box 7 as "Social security tips" with $10,065. Could it be that I'm supposed to be paying extra social security on those somehow? Like both the employer and employee portion?

If your tips are in box 7 and not box 8, your employer should have withheld the correct social security tax on them. The amount withheld should be 6.2% of the combined wages (box 3) and tips (box 7). Since your tips are properly reported in box 7, you're only responsible for the employee portion (6.2%), not the employer portion. Check if the amount in box 4 (Social security tax withheld) equals 6.2% of the combined amount in boxes 3 and 7. If that's correct but you're still seeing the huge refund drop, it might be how the tax software is handling the second W-2. Try entering your W-2s in a different order or double-check that you haven't accidentally entered the tip income twice.

This is exactly what happened to me last year! My full-time job was withholding as if it was my only job, and when I added my second W-2, my refund dropped by like $1,500. Freaked me out until I realized it was just fixing an incorrect excess calculation.

Good point! I made this exact mistake last year. Claimed my kid's dividend income on my return using Form 8814 and ended up paying WAY more tax than if I'd just helped him file his own return. The convenience cost me about $300 extra in taxes because I'm in the 24% bracket. Definitely worth running the numbers both ways.

This is such a helpful perspective, thank you! I hadn't even thought about the potential tax rate difference. I'm in the 24% bracket, so that would definitely impact the amount we'd pay on her interest income. Maybe the convenience isn't worth it after all. I'll run the numbers both ways before deciding. Really appreciate this insight!

That's a really important point about UTMA/UGMA accounts. I got audited a few years ago because I kept claiming my son's UTMA account income after he turned 18 (age of majority in my state). The IRS was very clear that once he hit 18, that income was his responsibility to report, not mine, regardless of who was managing the account day-to-day. Cost me penalties and interest because I had been doing it wrong for 2 years.

Is Form 8833 required for every tax treaty benefit? I thought there were some exceptions where you don't need to file it even if you're claiming treaty benefits?

You're right - there are some exceptions. You generally don't need Form 8833 for personal services income under $10,000, or for claiming reduced withholding rates on dividends, interest, royalties, etc. The IRS has a list of exceptions in the instructions for the form. There are also some "general benefits" from treaties that don't require the form. It's the more specific or unusual treaty positions that need disclosure with Form 8833.

From my experience, on Form 1040-NR you can only claim foreign tax credits against income that's considered effectively connected with a US trade or business. For regular passive income like dividends and interest, you usually can't use Form 1116 to offset those taxes on a 1040-NR.

How do you figure out how much to pay quarterly? Do you just divide what she owed last year by 4, or is there some formula? Also, do you get some kind of receipt you can use when you file?

You have a few options for calculating quarterly payments. The simplest is to take what she owed last year and divide by 4, which is what we do. As long as you pay 100% of your previous year's tax liability through withholding or estimated payments, you're generally safe from penalties (110% if your income is over $150,000). Yes, you get a confirmation number when you make the payment online, and you should keep those records. When you file your taxes, you'll report these payments on your return (usually on Form 1040-ES). The IRS system will match them up with your account automatically.

I did the comparison last year when my husband had 1099 income and I had W-2. For us, filing jointly saved about $1,800 compared to separately. The main reason was that filing separately prevented us from claiming certain credits and deductions. Filing separately is usually only better in very specific situations, like if one spouse has income-based student loan payments, massive medical expenses that wouldn't meet the threshold based on combined income, or if one spouse has tax issues you want to keep separate.